HKSAR v. Tam Wai Pio

CACC000032/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1998, No.32
(Criminal)

HEADNOTE

Criminal law - application of section 27 of the Organized and Serious Crimes Ordinance, Cap.455 - imposition of enhanced sentence for organized crime - guidelines for approach where the court must deal with enhancement of sentence - R v Law Hoi-fu and others (DCC 32 of 1995), (1996) 2 HKDCLR 1, no longer to be followed.

Obiter - where a lesser charge is not proceeded with after a guilty plea has been accepted to a more serious offence, the proper course is not to offer no evidence but to allow the former to lie on the file.

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1998, No.32
(Criminal)

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Coram: Power, V.-P., Stuart-Moore, J.A. and Pang, J.

Date of Hearing: 28 August 1998

Date of Judgment: 28 August 1998

Date of Handing Down Reasons: 15 September 1998

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J U D G M E N T

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Stuart-Moore, J.A. (giving the reasons of the Court):

1. On 17th December 1997, the Applicant (D2 at trial) pleaded guilty to two charges, both of which alleged that he imported an unmanifested cargo of cigarettes, contrary to section 18(1)(a) of the Import and Export Ordinance, Cap. 60. Judge Barnes sentenced him to a total of three years' imprisonment by imposing two years on each charge and ordering that one year should run consecutively for the second offence. The Applicant now seeks leave to appeal against sentence.

2. The agreed factual basis of prosecution's case is set out in the Reasons for Sentence at page 12 of the appeal bundle:

"The admitted facts disclosed that D2 was involved in the smuggling of Duty Not Paid (DNP) cigarettes. He was asked by a male 'Ng Chai' to register and set up a company in the name of Kwan Fu Trading Company for the purpose of cigarette-smuggling. 'Ng Chai' arranged the containers of cigarettes to be imported to Hong Kong and D2 arranged local transportation and porters for moving the cigarettes into the warehouses. He had taken part on 7 to 8 occasions but he could not remember the exact dates. He received $15,000 per month as remuneration.

In respect of the two charges, the two shipments were in fact DNP cigarettes though the shipping documents and manifests described the goods as umbrellas. These goods were therefore unmanifested. Although the consignee of both shipments was Tung Yick Trading Company ('Tung Yick') which was not registered in D2's name, D2 admitted that he was aware that Tung Yick was registered for the purpose of smuggling cigarettes. D2 placed the order for the transportation of both shipments to the warehouses with the local transportation company.

The amount of DNP cigarettes involved in the 1st charge is 8,000,000. The estimated market value of these cigarettes is $9,840,000 and the duty potential is $5,784,000.

The amount of DNP cigarettes involved in the 2nd charge is 8,460,000. The estimated market value of these cigarettes is $10,405,800 and the duty potential $6,116,580."

3. In passing, we observe that the prosecutor offered no evidence on a third charge, which alleged possession of dutiable goods contrary to section 17(6) as read with section 46(3) of the Dutiable Commodities Ordinance, Cap. 109. Clearly an offence of that kind was disclosed but it was unnecessary and inappropriate to pursue this charge in view of the pleas that had been entered for more serious offences. Nevertheless, the proper application should have been to allow the charge to lie on the file. As it is, the course adopted led the judge to enter a verdict of not guilty on charge 3 which could have had serious consequences if any challenge had been mounted to the propriety of the convictions on the first two charges. In practical terms, if this court had been called upon to substitute the offence disclosed in charge 3 under section 83A of the Criminal Procedure Ordinance, Cap.221, it would have been unable to do so because a verdict of not guilty had been recorded.

4. The prosecution made an application, under the provisions of section 27(4) of the Organized and Serious Crimes Ordinance, Cap. 455 (the Ordinance), that the court should determine that the matters accepted by the court prior to conviction showed that the specified offence disclosed in each charge was an "organized crime". Notice, for these purposes, was duly served on the Applicant under section 27(5) of the Ordinance which pointed out that if the court determined that an organized crime was established, an "enhanced sentence" could be passed upon him. The power to pass such a sentence under the Ordinance is provided by section 27(11) which reads:

"(11) Subject to subsections (12) and (13), where a court is satisfied beyond reasonable doubt -

(a) that the specified offence was an organized crime; or

(b) as to any information furnished under subsection (2) or (8),

or where any such matter is agreed by the person convicted, the court shall have regard to such matter when it passes a sentence on the person for the relevant specified offence and may, if it thinks fit, pass a sentence on the person for that offence that is more severe than the sentence it would, in the absence of such matter, have passed."

5. The defence at trial realistically accepted, as the judge also did, that each of these offences was rightly categorized as an organized crime. Mr. Mullick, who now appears for the Applicant, does not take issue with this. The definition of "organized crime" is provided in section 2 as meaning a Schedule 1 offence that -

"(a) is connected with the activities of a particular triad society;

(b) is related to the activities of 2 or more persons associated together solely or partly for the purpose of committing 2 or more acts, each of which is a Schedule 1 offence and involves substantial planning and organization; or

(c) is committed by 2 or more persons, involves substantial planning and organization and involves -

(i) loss of the life of any person, or a substantial risk of such a loss;

(ii) serious bodily or psychological harm to any person, or a substantial risk of such harm; or

(iii) serious loss of liberty of any person;"

6. For the purposes of deciding whether an enhanced sentence should be imposed, the prosecution furnished the trial judge, under the terms of section 27(2) of the Ordinance, with a statement of Ho Wai-man, Acting Assistant Superintendent of Customs and Excise.

7. Section 27(2) and (3) provide as follows:

"(2) The prosecution may furnish information to the court regarding any or all of the following -

(a) the nature and extent of any harm caused, directly or indirectly, to any person by the act in respect of which the person has been so convicted;

(b) the nature and extent of any benefit, whether financial or otherwise, that accrued or was intended to accrue, directly or indirectly, to that or any other person from that act;

(c) the prevalence of that specified offence;

(d) the nature and extent of any harm, whether direct or indirect, caused to the community by recent occurrences of that specified offence;

(e) the nature and extent of the total benefit, whether financial or otherwise, accruing directly or indirectly to any person from recent occurrences or that specified offence.

(3) Only information that would be admissible in evidence in criminal proceedings (including proceedings in respect of sentencing) may be furnished to the court under subsection (2)."

8. The trial judge decided to rely upon the statement under the terms of section 65B of the Criminal Procedure Ordinance although it seems perfectly clear to us that she could also have done so under the provisions of section 27(11)(b) of the Ordinance (above). The statement (at page 75 in the appeal bundle) covers a number of matters in the admitted facts to which reference has already been made from the Reasons for Sentence. However, it goes on to state, as must be obvious, that such a large loss of revenue to the Treasury would have harmful consequences to social welfare, housing, education, town planning, to take some examples, and that in the long run offences of this kind can affect the economy and normal trade. Ho Wai-man's statement also demonstrates that, despite very tight excise control systems, cigarettes intended for local consumption on which duty has been paid, have been generally decreasing since 1990. In 1992 and 1994, the figures marginally go the other way. In a chart, which was prepared to demonstrate the statistics on cigarette seizures (at page 78 in the appeal bundle), 179.2 million cigarettes were seized in 1994 rising through 1995 to 380 million cigarettes seized in 1996 with a duty potential of $254 million. The figures for 1997 were incomplete at the time of trial, although they are indicative of lower seizures than in the preceding three years. The chart is nevertheless a demonstration that, in general terms, cigarette smuggling is a rising problem which gives an indication that deterrence is required.

9. In a final chart prepared by Customs and Excise (at page 81 of the appeal bundle), the sentences imposed in the Magistrates' Courts during September to November 1997 illustrate that in every case of smuggling cigarettes, immediate terms of imprisonment were ordered for periods of between 4 to 8 months where duty of up to $1.59m had not been paid. The present case, it appears, is the only one of its kind to have been dealt with in the District Court. This is, no doubt, a reflection of the massive number of cigarettes involved, and that the unpaid duty is 7 times more than any of those recently dealt with by the magistracy.

10. Against this background, Mr. Mullick advances three grounds of appeal. He submits that:

(1) The totality of the sentence imposed on the Appellant was manifestly excessive or wrong in principle.

(2) The judge's starting point of 3 years' imprisonment, after enhancement of sentence in respect of each of the two charges, was set too high.

(3) In all the circumstances, the sentences in respect of the two charges should have been ordered to run concurrently.

11. In particular, as to this last ground, Mr. Mullick relies on the close proximity in date of the two offences, committed on 17th March 1997 and 21st March 1997 respectively. He submits that the extent of the Applicant's criminality justified the passing of wholly concurrent sentences. We are unable to agree with this submission. This was not an isolated, solitary offence. Both offences were of very considerable gravity.

12. It is the first and second grounds of appeal taken together which contain the most substantial point. Mr. Mullick submitted that the "enhancement element" of 50%, which was taken by the judge, was excessive having regard to the part played by the Applicant and his co-operative attitude towards the authorities once he had been caught.

13. It is clear from her Reasons for Sentence that the trial judge approached the question of an enhanced sentence in a careful way, broadly following the approach suggested in R v Law Hoi-fu and Others, (D.C.C. 32 of 1995), [1996] 2 HKDCLR 1, namely by:

(1) finding that the offence was an "organized crime" as defined in section 2 of the Ordinance;

(2) indicating the appropriate sentence to be passed after trial having regard to the role played by the Applicant (i.e. the criminality of the offender) without taking into account the element of enhancement for an organized crime;

(3) considering whether the sentence should be enhanced and, having decided that it should, indicating the extent of the enhancement;

(4) taking into account factors in mitigation (or aggravation) in order to arrive finally at the proper sentence.

14. As to (1) no more needs to be said. This was agreed.

15. In regard to (2), the judge was mindful that on summary conviction the maximum penalty for a single offence contrary to section 18(1) of the Import and Export Ordinance was 2 years' imprisonment and a fine of $500,000. On indictment the maximum is 7 years' imprisonment and a fine of $2 million. The judge determined that a starting point for sentence after trial on each charge should be 2 years' imprisonment.

16. The judge indicated, having regard to the matters set out in (3), that the circumstances of the case did require an enhanced sentence. She stated that the increase would have to be substantial if the purpose of the legislation was not to be defeated as regards "syndicated and well-planned activities". In this way, the judge arrived at a figure of 50% for the enhancement of sentence. In other words she considered that 3 years' imprisonment for each offence was appropriate after trial.

17. Finally, regarding point (4), the judge took into account the Applicant's good character but took the view that no more than a one-third discount could be justified. The judge made no specific reference to the Applicant's co-operative attitude and we observe that the Applicant's counsel also made no reference to this in mitigation. This may not be surprising because this was not, on any view, such as to attract a greater discount than one-third which will generally be the most a defendant of previous good character can expect to receive simply for a timely plea of guilty. The judge then took into account the totality principle and assessed that a sentence of 3 years overall was appropriate.

18. Accordingly, the judge, having enhanced the sentence of 2 years' imprisonment for each offence by 50%, had decided that each offence should carry a 3-year sentence. She then reduced by one-third each sentence in order to take into account the pleas of guilty coupled with good character and, having regard to totality, passed a sentence on the second charge that was only partially consecutive, resulting in a total sentence of three years.

19. We are in no doubt that the sentence imposed by the trial judge was correct in all the circumstances. However, we consider the approach taken in Law Hoi-fu to have been more complicated than is strictly necessary. In particular, it is difficult to see how a notional starting point after trial can properly be decided unless all the circumstances of the case, including the defendant's role in it and other aspects of his mitigation are taken into account. Having taken time to consider our reasons, we consider that the approach in Law Hoi-fu should no longer be followed.

20. Instead, we offer the following guidance in order to minimise the risk of confusion for cases where enhancement of sentence has to be dealt with under the procedure laid down in the Ordinance. This approach would, of course, have to be adapted as necessary where multiple offences are involved, some of which are not organized crimes. In such circumstances, a judge should consider, determine and set out in clear terms:

(1) (a) the appropriate starting point having regard to the part played by the defendant, and

(b) the sentence that the court would have imposed taking into account the defendant's mitigation and totality;

(2) whether the specified offence was an organized crime within the meaning of section 2 of the Ordinance;

(3) whether the crime calls for an enhancement of the sentence under the terms of section 27(11) having regard to the information supplied by the prosecution to the court under section 27(2)(a) to (e) or section 27(8) or the general nature of the organized crime itself;

(4) if enhancement is called for, the percentage increase by way of enhancement of the sentence.

21. In the present case, if this simpler formula had been adopted, precisely the same result would have been achieved. Taking the facts and figures adopted by the trial judge, and using the four-stage process we have proposed, the rationale for the sentences imposed would have come to this:

(1) (a) the appropriate starting point after trial would have been 2 years on each charge, and

(b) taking into account the mitigation, a one-third discount would have left 16 months' imprisonment on each charge;

(c) taking into account totality, this 32 months could properly be reduced to 24 months;

(2) each offence constituted an organized crime within the meaning of the Ordinance;

(3) enhancement was called for having regard to the nature of the offences;

(4) a 50% increase in sentence would have raised the overall sentence to one of 36 months.

22. We gave serious thought to the propriety of a 50% increase of sentence for offences such as these. InLaw Hoi-fu, the court was concerned with offences of handling stolen BMW motorcars where a 50% increase in sentence was also made. We take the view that enhancement by 50% cannot be criticized. In saying this, we recognise that there may well be organized crimes such as those involving drugs and prostitution which may attract percentage increases above or well above 50%, and even some cases involving stolen cars or smuggling of a very grave kind. This was envisaged by this Court in HKSAR v Cheung Wai-man and others, Cr.App. 666/97 (unreported), where Liu J.A. said (at page 10):

"For such organised crimes as vehicle smuggling, trafficking in women for the purpose of prostitution and the use of force to recover the money lent at an excessive interest rate to gamblers as in this case, this court is of the view that an enhanced sentence of even more than 50% is appropriate."

23. The sentence imposed in the present case was neither manifestly excessive nor wrong in principle. It is for the reasons we have provided that we refused leave to appeal and dismissed the application.

Representation:

Mr. D.G. Saw, S.C. & Miss Grace Chan, S.G.C. for D.P.P./Respondent

Mr. John Mullick instructed by D.L.A. Applicant.